SA Agri-Food Overview

South Africa has a very strong agricultural sector; in most cases it is self-sufficient in fresh fruits and vegetables, as well as in inputs for its food processing sector. Spices are the one category for which it has extremely limited local capacity and virtually all its requirements for this product group are imported.

In 2009, South Africa’s imports of the fruits, vegetables and spices covered by this report totalled 342 698 tons (US$ 325.7 million). The growth in imports has been extremely positive, with the figures showing overall increases of 75% in value and 48% in volume over the five-year period up to 2009.

Imports are concentrated in certain product types and reflect the areas where South Africa has limited capacity to meet local demand. In 2009, some 70% of the volume of imports took place across 10 tariff headings. Dried kidney beans (HS 071333) are by far the most important import in this category, accounting for 27% of the total volume of imports in 2009. The next most important by volume is apple juice (HS 200979), followed by bananas, dried and shelled peas (HS 071310), prepared potatoes (HS 200410), grape juice (HS 200969) and prepared tomatoes, whole or in pieces (HS 200210).

South Africa has four windows of opportunity for exporters in developing countries…

This report has identified specific opportunities that exporters in developing countries could take advantage of. The most obvious opening is in the supply of out-of-season or counter-season fruits and certain vegetables. Imported counter-season fruits include citrus (currently sourced from Israel, Spain and Egypt), avocadoes (primarily from Spain), grapes, stone fruit (Spain) and bananas (Mozambique). The key buyers indicate that bananas and avocadoes probably offer the best opportunity for exporters in Africa. There are also market possibilities for watermelons and fine vegetables (long-stem broccoli, fine beans, snap peas, mangetout and baby corn).

The second opening lies in the supply of raw materials for the food processing sector. South Africa has an extremely strong agri-processing sector. Rising domestic demand and the inability of domestic producers to meet demand in certain areas bode well for external suppliers of raw materials like dried beans, dehydrated vegetables and nuts. The keys to selling to this market are good quality products, consistency in both product quality and availability, and competitive pricing.

The third opportunity relates to the manufacture of products carrying the private or own brands of South Africa‘s large retailers and major importers. The number of private labels available in supermarkets is increasing. It seems that retailers have understood the value of differentiation and they compete on price through meaningful private label offerings. A number of these products are manufactured internationally in response to the demand of retailers and importers for competitively priced products. Products that could be targeted for private labels include canned vegetables, canned beans, counter-season fruits, fine vegetables and specific spice mixes.

The fourth opportunity is for the supply of spices to South Africa. The country produces very little spice domestically and imports virtually all its requirements. Annual imports of spices are between 19 000 and 22 000 tons. Imports are dominated by chillies, turmeric, peppers and cumin. Developing country exporters could break into this market in a meaningful way provided they are in a position to offer what the market requires. The spice importers report that they will not procure from companies offering a single product. Spice exporters therefore need to put together a range of products with which to approach the South African market.

…but it is essential for exporters to take care of the barriers to entry first

This report has identified a major barrier to the entry of supplies of fruits and vegetables from the region. This is the inability of South African importers to obtain sanitary and phytosanitary (SPS) permits for produce sourced in Africa owing to the absence of procedures for pest risk assessments.

The South African Department of Agriculture is particularly strict about blocking any agricultural product imports that may pose a risk to South African production. Poor in-country monitoring in a number of African countries and the lack of a reliable capacity to apply SPS requirements contribute to this problem.

Regional SPS standards have yet to be established and ratified. Until these issues are addressed, African producers are unlikely to find ready markets in South Africa.

A further constraint is that South African retailers and importers are basically unaware of the potential of African countries as suppliers. They do not know what products are on offer, which companies are exporting and what volumes are available. Countries and companies need to embark on targeted marketing campaigns to educate South African buyers.